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This Einhorn Favorite Should be a Big Winner in 2014

If you've been in the market this year, you are likely pretty happy with your results. Indeed, the bias this year has been all about the bulls, and until we see the price action reflect otherwise, the big winners are likely to keep on giving in 2014.

For traders like me who love to ride strong momentum stocks during bull markets, I think the best place to put new capital to work is in those big winners trading at or near new highs.

One tech stock that fits this description perfectly is Micron Technology (NASDAQ: MU).

The company is one of the largest makers of computing memory chips in the world, but you don't have to have a very long memory to know that the stock has been a trader's dream of late. Year to date, MU has delivered a gain of nearly 245%, an incredible run for a large-cap tech stock that's been around for some time.

And though shares are more than 50% above their long-term, 200-day moving average, there have been scant episodes this year where traders got scared and sold the stock off because it was perceived as being overbought.

From a fundamental perspective, the shares do not seem overvalued. With a current price-to-earnings (P/E) ratio of just under 20, the stock is neither super cheap nor prohibitively expensive.

For a stock such as MU, P/E isn't really a driving force. It's the "momo" crowd that's kept MU on the best-dressed list for 2013, and until that momentum falters, this stock should be considered an attractive fast-money trade.

Another driver for MU is one that a lot of stocks would like, and that is the backing of famed investor David Einhorn and his hedge fund Greenlight Capital. In November, Greenlight reported a stake of about 23.02 million shares in the memory chipmaker. That comes to about a 2% position in the company.

According to Einhorn, Micron stands to benefit from a likely consolidation in the DRAM memory chip business. In an interview on CNBC, Einhorn speculated that new uses for Micron-made DRAM chips in products such as smartphones and video game consoles will continue to boost earnings in 2014. He also said that despite the huge run in the shares at the time, the stock is likely to continue climbing in 2014.

So far, that call has been right on target. Since Einhorn's comments, shares have spiked about 10%.

The next big event for Micron will be the release of its fiscal Q1 earnings scheduled for Jan. 7. If the results impress, the stock is likely to keep flying higher.

Recommended Trade Setup:

-- Buy MU at the market price-- Set stop-loss at $20.16, approximately 8% below the current price-- Set initial price target at $25.21 for a potential 15% gain in three months

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